Avid 2014 Annual Report Download - page 84

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The Company’s Second Amended and Restated 1996 Employee Stock Purchase Plan (the “ESPP”) offers the Company’s shares for
purchase at a price equal to 85% of the closing price on the applicable offering period termination date. Shares issued under the ESPP
are considered compensatory. Accordingly, the Company is required to measure fair value and record compensation expense for share
purchase rights granted under the ESPP. The Company last issued shares under the ESPP on January 31, 2013. On March 8, 2013,
participation in the ESPP was suspended. On November 12, 2014 the Board of Directors approved resumption of the Company’s
ESPP upon the completion of certain required reports to the Securities Exchange Commission. A special plan period was opened from
December 1, 2014 to January 31, 2015 and was available to all eligible employees of the Company. In order to compensate for the
shortened special plan period, the maximum payroll deductions by participating employees was increased from 10% to 15% during
the special plan period, with the overall payroll deduction cap of $2,500 for the special plan period remaining unchanged. A total of
441,913 shares remained available for issuance under the ESPP at December 31, 2014.
The Company uses the Black-Scholes option pricing model to calculate the fair value of shares issued under the ESPP. The Black-
Scholes model relies on a number of key assumptions to calculate estimated fair values. The following table sets forth the weighted-
average key assumptions and fair value results for shares issued under the ESPP during the years ended December 31, 2014, 2013 and
2012:
Year Ended December 31,
2014 2013 2012
Expected dividend yield 0.00% 0.00% 0.00%
Risk-free interest rate 0.09% 0.09% 0.08%
Expected volatility 35.0% 51.0% 51.5%
Expected life (in years) 0.17 0.25 0.25
Weighted-average fair value of shares issued (per share) $2.02 $1.00 $1.30
The following table sets forth the quantities and average prices of shares issued under the ESPP for the years ended December 31,
2014, 2013 and 2012:
Year Ended December 31,
2014 2013 2012
Shares issued under the ESPP — 27,936 142,658
Average price of shares issued $— $6.29 $6.96
Stock-Based Compensation Expense
The Company uses the accelerated method of attribution for awards with performance conditions and graded vesting features for
options granted during 2014 and the straightline method for restricted stock units and options granted prior to 2014. The Company
estimates forfeiture rates at the time awards are made based on historical and estimated future turnover rates and applies these rates in
the calculation of estimated compensation cost. The estimation of forfeiture rates includes a quarterly review of historical turnover
rates and an update of the estimated forfeiture rates to be applied to employee classes for the calculation of stock-based compensation.
Forfeiture rates for the calculation of stock-based compensation were estimated and applied based on three classes, non-employee
directors, executive management staff and other employees. The Company’s annualized estimated forfeiture rates were 0% for non-
employee director awards, 10% for executive management staff and 15% for other employee awards. Then-current estimated
forfeiture rates are applied quarterly to all outstanding stock options and non-vested restricted stock awards, which may result in a
revised estimate of compensation costs related to these stock-based grants.
Stock-based compensation was included in the following captions in the Company’s consolidated statements of operations for the
years ended December 31, 2014, 2013 and 2012, respectively (in thousands):